sec 1256 contracts and straddles

Forum|Forum|7 years ago
April 6, 2019
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I received a K1 form with some capital gains (for a publicly traded ETF - UVXY) in section 11 C - Section 1256 contracts and straddles. These show up as capital gains in my tax return software. My 1099-B also shows some capital gain for this ETF. Should I increase the cost Basis of my ETF while reporting capital gains, to compensate for gains reported in K1 form?

Best answer by Anonymous_

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Anonymous_

Employee

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vramAuthor

Employee

Thanks for your reply.

I originally sold my shares for around $2500 loss.

Section 11C in my My K1 form shows $5115 gain. According to the K-1 sales schedule, my cost basis has been decreased by $2568. So effectively I am paying taxes on the $5115 gain, and a tax on the profit due to decreased cost basis.

I am confused why I am paying taxes on $7600 when I actually lost $2500 on the trade.